E-commerce personalization has come a long way.
Personalized product recommendations and content, as well as personalized social media ads, emails and more are now increasingly being adopted by retailers to enhance multichannel shopping journeys and to drive sales.
Most, if not all, of the expected advances outlined will be outwith the experience, knowledge and budget of most SMEs (small medium enterprises) as they involve some major technological input which is generally outside their abilities, skill and budget.
Having said that the general concept behind them should not be completely overlooked.
Any small business can start to enjoy the benefits of personalization if only in a small way by maximising existing opportunities eg email marketing. They already have a vast store of data, both personal and buying history which is a good starting point.
The increasing interest in technology is fueling further innovation. Based on our knowledge of the latest research and development in this area, here are four trends in e-commerce personalization that are likely to thrive in 2021 and beyond:
1. Image Recognition Will See Greater Adoption
Image recognition capabilities, such as the ability to recognize specific colors and visual patterns within product images (such as clothes), will become increasingly popular and help to drive richer, more relevant shopping journeys.
In home interiors and apparel, this will enable more granular “shop the look” recommendations and make it easier for consumers to create their own look by searching for similar or matching products.
For merchants, image recognition will support more sophisticated online experiences by presenting products as shoppable content within on-screen images and videos. For example, a shopper could click on a coffee table or a rug shown in a living room and place them in their cart.
2. AI-Powered Personalization Will Be Easier to Understand
Personalization that uses artificial intelligence (AI) can be intimidating, with some consumers concerned about what data merchants are using to enable it. This is why e-commerce brands and tech vendors are looking for ways to make AI decisions more transparent to reassure shoppers.
We’ll start to see more examples of product recommendations being automatically accompanied by simple explanations that make it crystal clear to the shopper what data was used to select those relevant products.
If a shopper is shown a skirt that’s “recommended for you,” they might be presented with a list of explanations such as, “it’s in your size,” “shoppers who also purchased (x product) also went on to buy (y product),” “it’s a similar style to what you’ve previously purchased,” etc.
3. Psychographics Will Create More Possibilities for Personalization
Personalization and segmentation in online retail has mostly relied on shoppers’ online behavior and their purchasing histories as well as demographics (e.g., age, gender, location, etc.) to create relevant shopping experiences.
Now new types of personalization are emerging that rely on psychographic profiling.
For example, by analyzing visitors’ behavior, algorithms could deduce that a visitor is assertive, adventurous or trusting in the way they shop. Content and product recommendations could then be personalized to reflect that person’s shopping personality.
4. Personalization Will Begin to Target Longer Shopping Journeys
Most e-commerce personalization today is focused on tailoring the shopper’s experience in the current visit, or to show them relevant content or offers if they return within the next 30 days.
However, the technology is becoming more sophisticated and we can expect a larger focus on longer shopping cycles.
How does a consumer’s current shopping behavior point to their purchase tastes and preferences in the longer term? Does a person’s brand affinities and tastes in their teens give clues to purchasing habits in their 40s?
This kind of advanced personalization is most likely to be applied for big ticket purchases, such as luxury goods or cars. For example, wiIl the model of toy car purchased for a child influence the car brand they want when they become an adult?
In the current “online first” climate, retailers are set to invest more to develop and enhance the e-commerce experience. And personalization is likely to become increasingly sophisticated and an even more important part of how these experiences are enhanced.